1. For each of the following, briefly explain whether the situation violates any form of market efficiency, and why a. An announcement to issue equity results in a 3% decline in the stock price of the issuing company. The decline takes place within minutes from the announcement. . b. About half of the mutual funds in a given year outperform the market.

c. Over the last five years, Down-Up mutual funds had outperformed the market. The fund invests in stocks that experienced a 45% decline in value over the last year.

d. Insiders on average earn excess returns when they trade in their company stocks.

e. Companies that announce a change from FIFO to LIFO exhibit positive and significant abnormal return of 2% at the announcement date.